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Vivendi Unit, Charlie Ergen's EchoStar Eye Brazil Pay TV Venture

Charlie Ergen
Alex Wong/Getty Images
EchoStar and Dish Network chairman Charlie Ergen

The companies cite expected consumer demand driven by the soccer World Cup in 2014 and the Summer Olympics in 2016 in Rio.

French media and telecom conglomerate Vivendi said Tuesday that its Brazilian broadband unit GVT and a subsidiary of Charlie Ergen's EchoStar are in negotiations about the formation of a pay TV joint venture in Brazil.

"GVT and EchoStar aim to position their future joint venture as a leader in the fast-growing Brazilian pay TV market, which would also benefit from the expected higher demand driven by two key global events to be held in the country: FIFA World Cup in 2014 and the Olympic Games in 2016," they said in a statement.

Both sports events will take place in Rio de Janeiro.

The joint venture would be headquartered in Brazil and managed by GVT. Financial details weren't disclosed. 

"The objective is to offer a national service based on IPTV and a unique high-power satellite to provide [cutting] edge features, quality and reliability to consumers," the firms said. They added that the venture "would benefit from GVT´s strong market position and state-of-the-art IP network combined with EchoStar´s expertise in satellite and video technology and its Brazilian licenses."

The deal is subject to definitive agreements and corporate and governmental approvals.

EchoStar is a provider of TV set-top boxes and satellite services that was separated from the Dish Network a few years ago. Ergen serves as chairman of both EchoStar and Dish.

Echostar bought a national satellite license in Brazil in 2012 but has no subscribers there yet.

Vivendi previously looked for a buyer for GVT amid asset disposals but didn't attract offers with a price it felt was appropriate. Dish competitor DirecTV was among the suitors.

Management has since said that the French conglomerate would explore a split into its French telecom business and its media assets, including Universal Music Group, French pay TV firm Canal Plus and GVT. It has hinted that GVT could explore partnership opportunities and could remain open to future bids.

"We see the deal as evolutionary, and it remains unclear whether this means GVT will be retained or disposed," said UBS analyst Polo Tang. "The move potentially rules out a disposal to DirecTV in the future."

E-mail: Georg.Szalai@THR.com
Twitter: @georgszalai